New wave of credit card abuses

The study, from the Pew Health Group's Safe Credit Cards Project, found that most of the practices deemed "unfair" or "deceptive" by the Federal Reserve under the law have disappeared from new credit card offers since Congress passed the law.

"Most of the news is good, but we are seeing the rise of new harmful behavior," said Shelley Hearne, managing director of the Pew Health Group.

For example, issuers have been increasing fees for cash advances and balance transfers. Banks have hiked those fees to a median 4% as of March from 3% in July 2009, according to the study. Credit union cash advance fees rose to 2.5% from 2%.

The Pew researchers also found that penalty rate increases, which are not subject to CARD Act rules, remain widespread.

According to the study, 94% of bank cards and 46% of credit union cards included penalty rate terms. The median penalty rate, when disclosed, rose to 29.99% in March from 28.99% in July 2009.

At the same time, the study found that some credit card disclosures stopped including the size of penalty interest rates, even as issuers reserved the right to impose them.

"Federal regulators should pay attention to this problematic new trend," said Nick Bourke, a Pew director and co-author of the report. "When issuers withhold vital pricing information, it leaves cardholders in the dark and puts their financial security at risk, which is why federal regulations have long required issuers to disclose their rates and fees up front."

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The study was based on a review of written application disclosures for nearly 450 credit cards and was conducted in March. It covers the largest 12 banks and largest 12 credit union issuers, which control a combined 90% of the nation's outstanding credit card debt.

On the positive side, the study found that credit card issuers have done away with "hair trigger" penalty rate increases, in which consumers are charged fees for minor account violations. In addition, unfair payment allocation and interest rate hikes on existing balances have also been eliminated.

Credit card issuers have also curtailed the use of over limit fees, which were present in 25% of all cards examined in March, compared with 80% in July 2009. Mandatory arbitration clauses that limit a consumer's right to settle disputes in court have also become less prevalent. 

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